The biggest shopping district available – the internet
There is an extremely thin line between brands that drive online sales, and those that don’t. As consumer behavior is changing rapidly, variables are being uncovered that reveal what exactly is driving our purchasing decisions.
Online shopping reached $66.3 billion last month — a 55% increase year-over-year. Despite these high figures, previous months have reported considerably higher growth, with June accounting for a 76% year-over-year increase, according to Adobe Analytics.
However, the decline is a sign that digital purchasing has started to reach market saturation, rather than an indication that people are less interested in e-commerce now.
E-commerce is arguably even more important – simply put, because it’s more competitive. As different consumer demographics and generations that weren’t as accustomed to online shopping as say, Gen Z, are now more comfortable in digital environments then they originally were. Naturally, many businesses across industries, such as retail, have been forced to increase their online presence and offerings, contributing to the saturated market for e-commerce. What businesses do with that online presence dictates the digital customer experience, and is where customers are won or lost in a psychological, subconscious, and instantaneous decision.
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In fact, according to CCW Digital’s consumer preferences survey – following COVID-19, 59% care more about the customer experience when deciding which companies to buy from, making things like frictionless website navigation, speed of service, payment options, and many more components of the online customer experience an extremely competitive advantage.
Google uncovers cognitive biases
As Annette Franz, Forbes Coaches Council Member and CEO of CX Journey once told me:
“Customer understanding really is the cornerstone of customer centricity… Once you know who your customers are, what their pain points, problems, jobs are trying to do, then you can design products, you can design services, you can design for that, and that’s what customer experience is all about.”
Last year the Google team set out to update their perspective on consumer decision-making, and with the help of behavioral science experts, The Behavioural Architects, they started on a journey into decoding what variables are driving purchasing decisions.
In a saturated market where consumers are presented with virtually endless products on the web, they’re forced to deal with the large scale and complexity of offerings through cognitive biases encoded deep in their psychology. This is how we rule out or choose what we buy when we’re presented with too many options in an era of e-commerce saturation.
Google’s research aimed at understanding customers’ online behavior and what the most common pain points in the online journey were. An updated decision-making model began to take shape. In the center of the model lies what Google refers to as the “messy middle” — a complex space between triggers and purchase, where customers are won and lost.
People look for information about a category’s products and brands, and then weigh all the options. This equates to two different mental modes in the messy middle: exploration, an expansive activity, and evaluation, a reductive activity. Whatever a person is doing, across a huge array of online sources, such as search engines, social media, aggregators, and review websites, can be classified into one of these two mental modes.
The team then identified six cognitive biases.
- Category heuristics: Short descriptions of key product specifications can simplify purchase decisions.
- Power of now: The longer you have to wait for a product, the weaker the proposition becomes.
- Social proof: Recommendations and reviews from others can be very persuasive.
- Scarcity bias: As stock or availability of a product decreases, the more desirable it becomes.
- Authority bias: Being swayed by an expert or trusted source.
- Power of free: A free gift with a purchase, even if unrelated, can be a powerful motivator.
These biases formed the basis of a large-scale shopping experiment with real in-market shoppers simulating 310,000 purchase scenarios across financial services, consumer packaged goods, retail, travel, and utilities.
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In the experiment, shoppers were asked to pick their first and second favorite brands within a category, and then a range of biases were applied to see if people would switch their preference from one brand to another. To test an extreme scenario, the experiments also included a fictional brand in each category, to which shoppers had zero prior exposure.
The results showed that even the least effective challenger, a fictional cereal brand, still managed to win 28% of shopper preference from the established favorite when it was “supercharged” with benefits, including five-star reviews and an offer of 20% extra for free. And in the most extreme case, a fictional car insurer won 87% share of consumer preference when supercharged with advantages across all six biases.
The experiment showed that, when applied properly, behavioral science principles are powerful tools for winning and defending consumer preference in the messy middle. One can also make the argument that consumers want a reason to end the shopping journey, put in as little effort as possible, and still feel validated by their decision - hence why 5 star reviews or discounts help the customer feel as if they made the right choice.
Closing the gap between trigger and purchase
The ultimate goal in getting a customer to pull the trigger on a purchase should be to reduce the cognitive burden experienced by consumers as they explore and evaluate your offerings, exemplifying the importance of “supercharged” drivers (i.e. online reviews or discounts). Give them a small reason not to think too much or spend too much time comparing products, and they will use supercharged drivers as an excuse to end the journey right then and there with a purchase they feel comfortable making.
Reducing the cognitive bias is particularly relevant for existing customers, who expect that their familiarity with your products and services should be reflected in a simple, pain-free purchase process.
According to CCW Digital’s consumer preferences survey, when we asked respondents, what defines a good customer service experience in digital channels, 60.63% reported easy to find help on the website/app – the largest response, over other categories such as proof of security and privacy (30.19%), personalization (28.5%), and many more. Today’s consumers want efficiency, of course. But they are also indecisive, not wanting to make difficult decisions that they think they may regret.
Many brands overcomplicate their marketing and communication, such as ad copy, recommendations, or customer support. To brands, these all may be good intentioned ideas in theory but they don’t have the consumer’s user experience (UX) in mind. Doing more with less becomes crucial for repeat buyers. When a customer is won, focus on retaining them by simply not failing - rather than consistently trying to exceed expectations, creating room for error.
So, what might these barriers look like in practice? According to Google, poor site speed, particularly on mobile. Inconsistent or unclear messaging, particularly between ad copy and landing page. Inadequate information, such as missing product details that actually are necessary. User experience issues, such as unclear navigation, pop-ups, and limited payment options. The cost of getting these extremely basic user experience considerations wrong can be costly.
In a study looking at the importance of mobile speed, the team saw that while 95% of users said they would return to a site they perceived as being fast, only 62% said they would revisit a site they perceived as slow. In another study, they saw that a 0.1 second improvement in mobile site speed increased conversion rates by 8.4% for retail sites, and 10.1% for travel sites. Lowering the drag that factors such as speed and design have on interactions with your brand increases cognitive ease, making shoppers less likely to be motivated to dive back into another cycle of exploration and evaluation.
This is a time when the world is vulnerable, where every person and organization is adapting to life with a live virus in their midst, where no one is operating from a best-in-class pandemic playbook to survive modern financial Darwinism. Brands, including marketers and customer experience departments must become the very people they’re trying to reach. This means that among innovation, compliance, time and technology, humanity must become the greatest application.
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For media coverage, lead gen, and digital marketing inquiries, (or to say hi), contact me at matt.wujciak@customermanagementpractice.com, or connect with me on Linkedin at Matt Wujciak. And remember, identifying consumer behaviors before they become trends is how brands deliver compelling marketing and customer experiences.